UPDATE 3-Apple's results fail to excite ahead of holiday quarter

Bill Rigby
Monday, 28 Oct 2013 | 5:38 PM ET

Oct 28 (Reuters) - Apple Inc's profit and margins slid despite selling a solid 33.8 million iPhones in its September quarter, prompting disappointed investors to cash in some of the stock's recent strong gains.

Wall Street had hoped for a stronger beat on quarterly sales after the company predicted in September that its revenue and margins would come in at the high end of its own forecasts.

Shares in Apple, which have gained 17 percent since, slipped about 2 percent after hours to $519.10 on Monday.

Investors will now listen closely to CEO Tim Cook's comments about the crucial holiday quarter.

The world's most valuable tech company said on Monday it expected revenue of $55 billion to $58 billion for the current quarter, outpacing Wall Street's average forecast for about $55.65 billion.

Gross profit margin for the fourth quarter was 37 percent, down from 40 percent a year ago as intense competition from the likes of Samsung Electronics took a toll. That was roughly level with analysts' average 36.9 percent forecast.

"We would have expected higher gross margins," said Morningstar analyst Brian Colello. "With the higher price phones and clear preference toward the 5S, we were all expecting more of a gross margin boost for the December quarter."

Apple said it sold 33.8 million iPhones last quarter, roughly in line with analyst expectations for 33 million to 36 million.

It sold 14.1 million iPads during the quarter, up very slightly from 14 million in the year-ago quarter, and moved 4.6 million of its Mac computers, down from 4.9 million a year ago.

Overall revenue was $37.5 billion, ahead of Wall Street's average forecast of $36.8 billion, according to Thomson Reuters I/B/E/S.

Earnings per share were $8.26, ahead of analysts' average estimate of $7.94.

"They had already preannounced and people got euphoric in recent weeks. It wasn't a massive blowout," said Shannon Cross of Cross Research.

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